Dipula Income Fund has announced that it is considering a strategic partnership with Resilient REIT in a R1 billion transaction that will see Dipula optimise its capital structure and benefit from the retail property and deal-making experience of Resilient to create further shareholder value.
“This transaction provides an elegant solution to simplifying our capital structure that has frustrated the growth and fair value rating of Dipula for several years” commented Izak Peterson, CEO of Dipula.
“In addition, the transaction further bolsters our retail portfolio of township, rural and convenience shopping centres, and we expect to continue working closely with the Resilient team in unlocking value for our shareholders.”
Des de Beer, CEO of Resilient commented: “Dipula has a solid management team with great prospects that we want to get behind and support to help drive the creation of value for shareholders. We envisage the co-ownership of suitable retail assets with Dipula, and we’ll continue to support the Company to play a leading role in the listed property sector once their capital structure has been simplified.”
Dipula currently has a dual share structure with A and B shares. A shares have a preferential entitlement to any distributions, growing annually at the lower of CPI or 5%. B shareholders receive the balance of the net distributable income, resulting in the B shares continuously trading at a deep discount to net asset value.
The proposed investment by Resilient envisages that Dipula will offer to repurchase all the issued Dipula A shares from shareholders, through a combination of cash or by way of a share swop for Dipula B shares.
In terms of the proposal, Dipula will offer A shareholders R6.61 per Dipula A share, subject to the pro rata adjustment of the election so that the overall aggregate cash payable is equal to approximately R600 million. A shareholders will receive two Dipula B shares per A share for the remainder of their A shares.
Resilient’s proposed investment includes Dipula’s co-ownership of Circus Triangle Mall, a 34 489m² retail centre situated in Mthatha central, anchored by Shoprite, Game and Woolworths.
Upon implementation of the proposal, Resilient will hold a significant investment in Dipula and will have the right to appoint one representative to the board of directors of Dipula.
Dipula will issue further market updates once it has resolved to proceed with the proposal, and the agreements have been concluded.